Benefits of Apprenticeship Act 1961: A Complete Guide

Who is Called an Apprentice?

An apprentice is a person who has entered a contract of apprenticeship with the employer for apprenticeship training under The Apprentices Act, 1961.

As per the dictionary’s definition, an Apprentice is “a person who is learning a trade from a skilled employer, having agreed to work for a fixed period at low wages.
Synonyms: trainee, learner, probationer.
Example: an apprentice electrician

Thus, in the case of companies, the “apprentice” is the part-time employee and the “trainer” is the employer. An apprenticeship gives freshers the chance to get hands-on experience of a real job. It helps them put their theoretical knowledge to use in a practical scenario. Thus, making them ready for full-time employment.

Contract of Apprenticeship

A contract of apprenticeship has to be signed between the employer and the apprentice. This is similar to a contract between an employer and a permanent employee. If the apprentice is a minor then his guardian can sign the contract on his behalf. Furthermore, the signed contract has to be submitted to the apprentice office within 7 days. Then the apprentice office has to certify the signed contract. The apprentice office is most likely to be located in the ITI office of the city. Online registration of the contract of apprenticeship is mandatory for both Designated Trades & Optional Trades

What are Apprenticeship Training and Apprenticeship Act 1961 Benefits?

Apprenticeship training is a course of training in an industry or establishment, under a contract of apprenticeship which consists of:

1. basic training component and
2. on-the-job training (OJT)/practical training at the workplace.

There are several Apprenticeship Act 1961 Benefits. For instance, apprentices get an opportunity of undergoing ‘on-the-job’ training and are exposed to real working conditions. They get a chance to work on advanced machines and equipment, industry-specific best practices and learn more about their field. Apprentices become skilled workers once they have acquired the knowledge and skills in a trade or occupation, which helps them in getting wages or self-employment. In addition, Apprenticeship Act 1961 Benefits also state that apprentices get a stipend at the prescribed rates during the training.

In parallel with training your workforce under the Apprenticeship Act, it’s vital for businesses to understand the legal landscape surrounding Non-Compete and Non-Solicitation Agreements. Such agreements can be critical in protecting your business interests, especially when it comes to retaining proprietary knowledge and client relationships. Our article delves into the legality and enforceability of these agreements in India, providing essential insights for employers looking to safeguard their operations.

Eligibility Criteria Under the Apprenticeship Act, 1961

The eligibility of the apprentice depends on the following factors:

1. minimum 14 years of age
2. minimum 18 years of age, in case of hazardous industries
3. qualification varies from class V pass to XII class pass under the 10+2 system of education depending upon the trades.
4. he is of sound mental and physical health.
5. Apprentices must be registered on the Apprenticeship portal.
6. Apprentices must have an Aadhaar number / or a Unique Identification Number in the case of J & K and North-East candidates/apprentices.

The eligibility of the employer depends on the following factors:

1. Employers having less than four employees cannot hire an apprentice.
2. Employers having over 30 employees have to hire apprentices mandatorily.
3. The total number of apprentices cannot exceed 15% of the total number of full-time employees. Earlier this was 10%.
4. The total number or strength of workers shall be calculated on the basis of average strength in the preceding financial year.

Procedure for Registration

If you’re an employer looking to offer apprenticeship opportunities, here’s how you can register:

1. Firstly, visit the apprenticeship portal.
2. Then, register your establishment for the apprenticeship program. Note: If you’re offering Optional Trades, use the above link. For Designated Trades, register on this portal. These two portals will soon merge into one.
3. The information you provide will be used for online validation.
4. For further guidance, you can go to the “Get Started” option on the portal and follow the “Establishment User Manual”.

If you’re an apprentice you can undergo apprenticeship training in any industry/establishment, here’s how you can go about it:

1. Candidate may access the apprenticeship portal and register him/herself for an apprenticeship program in a sector/trade of his/her choice
2. Search for potential employers and apprenticeship opportunities posted by them on the apprenticeship portal
3. Send applications to potential employers for apprenticeship training
4. Receive offer letters from establishments online and send his/her acceptance
5. Sign the contract of apprenticeship with the establishment & commence the apprenticeship program
6. Candidates can go to the “Get Started” option available on the portal and follow the instructional manual i.e. “Candidate User Manual”.

Understanding compensation structures is crucial for employers, particularly when integrating apprentices into your workforce. The Minimum Wages Act, 1948, sets the foundation for equitable wage practices, ensuring that all workers, including apprentices, receive fair compensation for their efforts. This knowledge is not only essential for compliance but also for fostering a motivated and productive workforce. Our article provides a comprehensive overview of the Minimum Wages Act, offering valuable insights into how it impacts both employers and apprentices.

Is Apprenticeship Training Mandated Under the Act?

Yes –

1. All establishments having a workforce (regular and contract employees) of 30 or more are mandated to undertake Apprenticeship Programs in a range from 2.5% -15% of their workforce (including direct contractual employees) every year.
2. For establishments having a workforce between 4-29 this is optional.
3. Establishments that have a workforce of 3 or less are not permitted to engage apprentices.

What is the Apprenticeship Act, 1961? How Does It Work?

Section 2, clause AA of the Apprenticeship Act of 1961 defines an apprentice as “a person who is undergoing apprenticeship training in a designated trade in pursuance of a contract of apprenticeship.” 

Here, Designated Trade means a company or industry which the Central Government recognizes. Companies have to register themself on the official Apprenticeship India government website. Only then can they generate vacancies for an apprenticeship in their firm. These pre-defined trades can be either optional or designated in nature. Designated trade means that the apprentice has already undergone some official training by ITI or any other training centre. If the company hires an apprentice under Designated trade then they need to provide them official training from ITI or any other institute. On the other hand, Optional trade stands for non-technical jobs. These do not require any technical training. Just in-house training is sufficient. 

Different Annexures cater to different designated trades on the basis of one’s educational qualification as follows:

Annexure 1 – hosts a total of 259 Designated.

• Minimum Class 8 – Lineman, Plumber Mechanic, Painter
• Class 10 – Barber, Tyre Repair, Power Electrician
• Class 12 – Operate Advanced Machine and Topps, Brew Master, Call centre assistant
• B.Sc. – Advanced Attendant Operator
• Computer Operator Course certified by the National Council of Vocation Training – Sisad – 

Annexure 2 – Subject in Eng. & Technology Designated for Graduate Technician Apprentice – engineering fields, biotech, interior design, herbal, health etc. Total of 163 designated subjects for an apprentice. 

Annexure 3 – Subject and trade designated for Vocational Apprentice – Diploma / ITI holder – accounts, agriculture, office assistant to chef. A total of 137 trades, provide skills and education that prepare you for a job.

What is the Minimum Stipend to Be Paid to An Apprentice?

As per the Apprenticeship Rules (amended 2019), the stipend to be paid to an apprentice is as below:

• In the case of Skill Certificate Holder, stipend payable per month shall be as per his/her educational qualification as mentioned in the table above.
• During the 2nd year of apprenticeship training, there shall be an increase of 10% in the prescribed minimum stipend amount and further 15% increase in the prescribed minimum stipend amount during the 3rd year of apprenticeship training.
• In the case of National or State Certificate holder, the period of training already undergone by him or her in a school or other institution recognized by the National Council or State Council, shall be taken into account for the purpose of determining the minimum payable rate of stipend.
• In the case of Fresher apprentice, during Basic Training for a period up to 3 months, the stipend amount to be paid by the establishment shall be 50% of the prescribed stipend. Further, in case of simultaneous Basic Training (BT) and On-the-Job Training, full amount of the stipend is to be paid.

Can an Organization Pay More Than the Stipend Amount to the Apprentices?

As per Apprenticeship Rules 1992 (amended upto 2019) minimum rate of stipend has been fixed as per educational/ technical qualification. Employers are free to pay higher rates of stipend.The reimbursement under NAPS would however be limited to the 25% of the prescribed stipend amount (as per Apprenticeship Rules amended on 2019) or Rs 1500/- whichever is minimum, per month per trainee.

Are Apprentices Allowed to Work in the Night Shift?

• Apprentices aged 18 and above can work during the normal working hours of the establishment, including night shifts.
• Apprentices under the age of 18 can only work between 8:00 am and 6:00 pm.
• Any exceptions to these rules need to be approved by the Apprenticeship Adviser on a case-by-case basis.
• The total number of hours per week for a trade apprentice undergoing practical training should be between 42 to 48 hours, including the time spent on related instruction.
• Trade apprentices undergoing basic training should work for 42 hours per week, including the time spent on related instruction.
• In their second year of apprenticeship, trade apprentices should work for 42 to 45 hours per week, including the time spent on related instruction.
• From the third year of apprenticeship onwards, trade apprentices should work the same number of hours per week as the workers in the trade in the establishment where they are undergoing apprenticeship training.
• Graduate, Technician, and Technician (Vocational) Apprentices should work according to the normal hours of work of the department in the establishment where they are attached for training.

Can an Apprentice be Deployed on Overtime?

Rules regarding apprentices’ working hours, leave, holidays, and the engagement of apprentices by establishments:

• Apprentices’ weekly and daily hours of work are determined by the employer, but must comply with the training duration.
• Apprentices cannot work overtime unless it’s approved by the Apprenticeship Adviser. Approval is only given if overtime is in the interest of the apprentice’s training or in the public interest.
• Apprentices are entitled to the same leave and holidays as other employees in the establishment where they are training.

Regarding the Engagement of Apprentices by Establishments

• Only employers with four or more workers are eligible to engage apprentices.
• If an establishment has 30 or more workers, it’s obligatory for them to engage apprentices.
• The number of workers is calculated based on the average number in the previous financial year.
• Each establishment must engage apprentices in a range of 2.5% to 15% of the total workforce, including contractual staff. A minimum of 5% must be reserved for fresh apprentices and skill certificate holder apprentices.
• In any month, the number of apprentices should not be less than 2% or more than 18% of the total workforce.
• Establishments can engage apprentices from any category, including trade apprentice, graduate apprentice, technician apprentice, technician (vocational) apprentice, and optional trade apprentice.
• The total number of apprentices across all categories will qualify for compliance with the Apprenticeship Rule.
• All establishments must post their apprenticeship deployment plan on the portal every quarter by the 15th of April, July, October, and January.

While apprentices are a valuable asset to any organization, understanding overtime pay calculation and working hours is essential for ensuring fair compensation and compliance with labor laws. Our article outlines the legal requirements for working hours, overtime eligibility, and compensation calculations, providing employers with the knowledge needed to manage their workforce effectively. Whether you’re dealing with apprentices or full-time employees, this guide will help you navigate the complexities of labor regulations, ensuring your business practices are both ethical and lawful.

How Can the Apprenticeship Act, 1961 Benefit Your Business?

A few reasons why the Apprenticeship Act 1961 benefits companies are as follows:

1. Apprentices are not covered under the Workmen’s Compensation Act, 1923. Instead, they are covered under the Employee’s Compensation Act, 1923. This means that if an apprentice gets injured during the course of their apprenticeship training, they are entitled to compensation under the Employee’s Compensation Act, 1923.
2. Apprentice is not a employee and hence not eligible for any kind of statutory profit-sharing bonus or incentive, under Section 2(13) of the Payment of Bonus Act. It’s important to note that while apprentices may not be eligible for statutory profit-sharing bonuses under the Payment of Bonus Act, they may still be entitled to other benefits or incentives as per the terms of their apprenticeship agreement or the policies of the employer.
3. Employers do not need to contribute towards the Provident Fund of an apprentice. Apprentices or trainees that companies hire under the standing order also are ineligible for PF as per the Employees Provident Fund and Miscellaneous Provisions Act, 1952.
4. Establishments registered under the Apprentices Act, 1961 are exempted from contributing to the Employees’ State Insurance (ESI) and Provident Fund (PF) for apprentices engaged by them. Therefore, an establishment cannot pay ESI/PF to apprentices under the Apprentices Act, 1961.
5. Companies engaging apprentices can also undertake ‘skill training’ from their CSR funds over and above the requirement under the Apprentices Act.

What Support Does the Government Provide Under the Apprenticeship Act 1961?

As per the National Apprenticeship Promotion Scheme (NAPS), the government refunds 25% of the stipend, up to a maximum of Rs 1,500 per month. This is applicable to all apprentices with an employer. The government also helps in sharing the cost of basic training with Basic Training Providers (BTP). The government website also provides a platform for all employers and apprentices. The hiring of the apprentice, as well as departmental audit and return, can be done via with website.

What is the National Apprenticeship Promotion Scheme (NAPS)?

National Apprenticeship Promotion Scheme (NAPS) is a scheme of the Government of India to provide financial support to establishments undertaking apprenticeship training. NAPS was launched on 19th August 2016.

What Are the Components of NAPS?

The scheme has the following two components:

1. Reimbursement of 25% of the prescribed stipend subject to a maximum of Rs. 1500/- per month per apprentice by the Government of India to all employers who engage apprentices.
2. Reimbursement of the cost of basic training (up to a limit of Rs. 7500/- for a maximum of 500 hours= Rs. 15/hour) by the Government of India to Basic Training Providers (BTPs) in respect of apprentices who come directly for apprenticeship training without any formal training.

Objectives of NAPS

1. To promote apprenticeship training in the country.
2. To provide financial support to establishments to undertake apprenticeship programs in the following ways –

• To support establishments, (especially MSMEs) to engage apprentices under the Apprentices Act and pay stipends to them as per prescribed rates wherein under NAPS, 25% of the prescribed stipend subject to a maximum of Rs. 1500/- per month per apprentice is reimbursed to such establishments by the Government of India to engage apprentices.
• To support the establishments (especially MSMEs) that do not have in-house Basic training facilities to set up such facilities in-house or at a centre outside its premises or to engage Training Partners to undertake the Basic Training activity on their behalf for fresher apprentices who need to undergo such Basic Training before joining the shop floor (on the job training) under the Apprenticeship program. Basic training cost up to a limit of Rs. 7500/- per apprentice for a maximum of 500 hours is reimbursed to them (to be calculated @ Rs. 15/hour) /or to the Basic Training Provider engaged by them under NAPS by the Government of India.

Who Implements the Apprenticeship Program?

The Apprenticeship Program in India under the Apprenticeship Act 1961 is implemented by the Ministry of Skill Development and Entrepreneurship (MSDE) at the National level. The MSDE has further entrusted the Directorate General of Training [DGT] to implement the apprenticeship training falling under” Designated Trades” and made the National Skill Development Corporation [NSDC] responsible for apprenticeship training under “Optional Trades”.

Eligibility Criteria for NAPS?

Employers/ establishments interested to avail the benefits of NAPS must fulfil the following conditions:

1. Such contracts must be uploaded by the establishment for approval by the concerned apprenticeship advisor, which shall be facilitated on the portal
2. the Courses they operate under the apprenticeship program must be NSQF aligned.
3. the assessments at the end of all such programs must be done jointly between the establishment and the NCVT (for Designated Trades) / the concerned Sector Skill Council (in case of Optional trade).

Why Should I Register My Establishment in NAPS Portal?

In order to get the benefits of NAPS, establishments have to register their establishment in NAPS Portal.

Benefits of Registering Under NAPS?

Registering a trainee or establishment under NAPS, facilitate user with stipend and claims declared in the module.

Who can Claim the Stipend Amount?

There are two types of claims in NAPS i.e. BTP claims and Establishment claims. Only the establishment and BTP can claim this amount.

What is the Claim Amount in NAPS?

Establishment Claim: Establishment can claim 25 % of declared wages OR max. 4500 (whichever is less) from Govt. of India under NAPS.

Basic Training Providers Claim: BTP can claim 50 % of declared wages OR max. 7500 (whichever is less) from Govt. of India under NAPS.

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